Parents don’t tolerate “But they do it, too” as an excuse from their children. What about when adults in positions of power use it? That was Treasury Secretary Scott Bessent‘s message last week when he told CNBC, “When you are facing a nonmarket economy like China, you have to exercise industrial policy.” He then announced price controls on a broad but still-unspecified range of American goods.
Bessent argues that if you want to defeat your opponent, you must become more like them. This is a poor basis for public policy. It is also the opposite of how America defeated the Soviet Union in the Cold War, which was by outcompeting Russia. The United States could win again, this time against China.
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To be fair, Bessent has a good goal in mind. He wants China to loosen new restrictions on rare earth minerals. If China goes through with its threats to cut off U.S. access to rare earths, it could undermine America’s electric vehicle, defense, and technology industries. The problem is that Bessent’s proposed price controls are all pain, no gain — not only hurting American industry but failing to convince China to change its behavior.
Political threats are not always literal. There is a chance that both the Chinese and American governments’ belligerence is for show, and they will put their sabers away when they are done rattling them. Even so, ideas as bad as price controls are worth taking seriously.
Republicans knew this as recently as last year, when they opposed then-Vice President Kamala Harris’s price control proposals for groceries and rent. But when their party is in power, apparently, the laws of economics work differently.
Bessent proposed a type of price control called a price floor. This is the minimum price the government sets for goods. In this case, a price floor on, say, rare earth minerals would prevent China from selling rare earths cheaply to American businesses. This policy would then create an opening for MP Minerals, America’s sole rare earths miner, in which the federal government (not coincidentally) recently took a 15% ownership stake.
However, as of this writing, the Trump administration has yet to say which goods would receive price floors, how high they would be, and what statutes authorize the president to set prices without a congressional vote.
The effect of Bessent’s price floors would be roughly similar to tariffs, though fraught with legal ambiguity and perhaps less vulnerable to being struck down by courts. The Supreme Court is hearing a lawsuit challenging President Donald Trump’s “Liberation Day” tariffs in November and may well strike them down. Price floors are one of several methods the administration is using to continue its protectionist policies, should that happen.
Instead of bringing America down to Xi Jinping’s level with damaging industrial policy, the Trump administration should level up America’s own economic policies. Rare earths are not exclusive to China. They occur throughout the Earth’s crust, including in America. The reason America’s abundant rare earths are inaccessible is because of regulations, but it doesn’t have to be that way.
We need to reform our broken environmental permitting system. Successful permitting reform efforts would go much farther toward unleashing America’s rare earth minerals potential than price controls would. America has no shortage of mineral resources. However, it is exceptionally difficult to open a new mine in this country. On average, it takes 29 years to go from discovery to production, with the permitting process alone accounting for seven to 10 of these years.
The Trump administration’s addition of key mining projects to the FAST-41 program improves the environmental review process, making it more coordinated and speeding up development. But baked into it were exemptions that mostly benefit lobbyists.
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To create a genuinely competitive minerals industry, the U.S.’s permitting process must be reformed in a way that is both broad-based, allowing a wide range of projects to benefit from a more streamlined process, and technology-neutral, so industries can find innovative ways to protect the environment. Decades of anti-production policy by the federal and state governments have resulted in U.S. mining being in a predicament that price controls will not fix. The solution is to make our own production more efficient, not to create artificial barriers to competition.
China’s rare earths belligerence is a problem. Tariffs, price controls, and industrial policy will not solve the China problem. The best way to ensure that America’s technology, defense, and EV sectors have the rare earths they need, now and in the future, is deregulation and openness.
Ryan Young is senior economist at the Competitive Enterprise Institute. Paige Lambermont is a research fellow at CEI.
